Owing a property abroad - would like to hear people's experiences

OneInTheHat

I am pondering buying a property abroad.

I own my own home in outer London with a mortgage on a very good discounted rate (0.74%).

I am in my 40s and my pension provision when I retire is likely to be quite low and I'd like to invest in property. There is nothing remotely affordable with a reasonable return anywhere near me.

I have friends who moved out to Spain years ago and own a few properties there. I'd use the property myself as well as renting it out. I've found a nice 2 bed place somewhere I like, it's a reasonable price, near the beach, near a nice little town etc. I'm going to use good lawyers.

But I was wondering what people's experience of owning property abroad was like. Is it something they've done and regretted? Are they pleased they got into it?

mrsmazza

We own a bungalow in Spain. We bought it brand new 10 yrs ago. We absolutely love it. Our only problem we have is time to go out there.
We have lost money on it, but I have noticed the last 2 years prices have stayed the same, ( near Alicante ) .

Which part of Spain were you thinking, its a very BIG place.

ognum

We have just sold a property abroad which we built 12 years ago, we were very lucky to sell even though it was a fab house in an amazing position with sea access and views of the ocean on both sides. In the Caribbean so maybe slightly different.

After 12 years we have broken even, if we had invested the money in a UK property we would have made money! I guess we have lost money because we have not had a return on the money for the last two years. We didn't let the property it was only used by us.

It was a great experience but I would not do it again. The reasons are

Your holidays are no longer holidays
Maintenance takes a lot of your holiday time
You will find you don't go anywhere else
I now want variety in my holidays.
You are always waiting for a problem when you are home
Check if you let it what your tax liability is in both countries
On your holiday you will be paying bills, property tax, water, power etc, etc
For us hurricane insurance was many thousands of pounds a year.
Check out the selling fees, many countries have a big tax bill when you sell

I could sit and think about many other issues. I know we were lucky but I'm glad we have sold.

I would never invest abroad money you cannot afford to walk away from, for a pension there are other better ways.

peter_we

You will lose money on it. As a non-EU citizen you will be subjected to higher CGT, on top of all the other taxes Spain imposes. There millions of other holiday homes you will have to compete with and of course you will have to ask for a license to rent your property.

http://www.spanishpropertyinsight.com/2016/11/02/spanish-house-price-data-published-october/

Sales prices don't match real values - i.e. they are over priced -

http://www.spanishpropertyinsight.com/discussion/forum-topic/are-banks-deliberately-valuing-properties-low/

Also residents are taxed on worldwide wealth - so you will face an annual wealth tax on the value your UK property.

Instead, pay into your pension, pre-taxed income, its a bargain.

eddddy

I know a few people who have bought property in Europe (but not Spain). I think they all regret it for a variety of reasons.

But perhaps the overriding factor is that they have all lost money. Perhaps if European property prices turn around, they might view it more positively.

As you have friends in Spain, go and spend some time there and ask them about Spanish property ownership.


(But watch out for 'putting a brave face on' syndrome. I know a few people who have moved abroad because they've been priced out of the UK property market. When I visit, they tell me how great it is - but occasionally the mask slips...)

peter_we

Post Brixit, things will get much worst.

Nothing can be guaranteed. I heard UK citizens opening a bank account are viewed as a money laundering risk, healthcare, tax, residency, property rights, exchange rate risk. Spain was a !!!!-poor place to 'invest' before, now its a disaster zone.

Nice weather though, so rent..

AnotherJoe

A relative of mine owned a property in Spain.
He didn't suffer from the predilection of the Spanish to randomly bulldoze property they deemed retrospectively to be illegal, or add huge arbitrary charges for "improving the local area", always an issue buying in Spain whatever permissions you have, but even so he had endless hassles with taxes, lawyers, renting it out..
I'm sure he could have rented a variety of places with no hassle for the same outlay, and hassle free.
There are plenty of "nice 2 bed places somewhere I like, reasonable price, near the beach, near a nice little town" that dont need any any lawyers at all, let alone "good lawyers" (how would you know?), just rent them !

Alwayspurple

Whilst I'm not in your situation I do live in Spain and own a house. The process is not dissimilar in cost to UK.

Home ownership brings beaurocracy. Licenses to do just about anything. IBI (council tax) based on purchase price.

I would think the rental market in south is saturated. Your return won't be monitory. An empty property would worry me. We have bars and I believe burglary is worse in the south than here in the centre.

Buying from a distance and relying on an abogado could be risky. You want to check everything every step of way and you can't as you don't understand and are not next door.

Electric and all other services can be more expensive.

Also if you ever want to stay longer learn the language before you even set foot here. I never planned to live here and didn't have the chance.

I'd think twice if not thrice. The weather isn't everything although it is nice x

BritishBibliophile

My parents owned a property in France for a good few years. Having a property means you are effectively tied to holidaying in that area constantly to make it worth the purchase price. It was quite nice to start with (although my parents did buy an absolute wreck that hadn't been lived in for 10 years), but after 7 years my Mum was sick of never being able to go on holiday anywhere else. Not to mention that if the place has been empty for a while (they didn't rent theirs out) then you spend the first two days scrubbing the place from top to bottom because there will be a whole load of dead insects (and some dead mice) littering the floors, window sills, kitchen counter and bathtub.

In the end the straw that broke the camels back was that my parent's place was burgled, along with the other holiday property next door. The thieves clearly knew they were holiday properties as they'd taken their time choosing what to steal from each place, for example they stole my parent's radio but next door's TV and around 50% of next door's DVDs, they took a load of crockery and the toaster and kettle from my parents kitchen but they left the microwave and took next door's one instead etc etc.

Quite lucky though as another holiday property in a different region was burned to the ground as whoever robbed that place set fire to the mattresses to destroy the evidence.

Also if you don't speak the language (my parents only speak very basic French) then you are entirely dependent on the honesty of anyone who does some work for you, and even if they're honest, their second language skills still need to be better than yours!

It was lovely in the summer, we used to spend about 3 weeks in August out there, plus a week at Easter, but after a while it did get dull and I think we all used to dread having yet another summer holiday in the same little bit of France. It was less like a holiday and more like being at home, but in a place where you couldn't talk to anyone else and where there was no hot water because the boiler had broken down at some point in the past 6 months...

elsien

Someone I know has a flat in Portugal.
It works for them because they have good maintenance and cleaning contacts, they spend a lot of time there themselves out of season, and they are happy going to the same place year after year.
But most importantly they bought it for themselves, not as an investment. They only let it out to people they know, and the rents are not commercial they're lower than others in the area because they are content to just cover their costs and to make sure it's rarely left empty.
If it was bought as an investment they'd have to take a completely different approach.

Andypandyboy

We owned a holiday home in Italy which we inherited. We had many happy family holidays there and because we hadn't invested out own money as such we didn't feel tied to using it for every holiday. We did often use it as a base for other jaunts to Italy using the trains to travel between the different places. We were part of the local community and the property was well looked after in our absence. We had cleaners go in just before we arrived each time and for a really reasonable sum we started our holiday with a clean house. We only let close friends and family use it and it was a well loved second home.

As the family grew it became too small and so we sold it with the firm intention of buying again. We haven't as yet because we now do more long haul holidays and are now not sure if we want to be tied down to a specific country again.

However, if we did consider it we might look at Portugal where I understand the tax advantages are tremendous, especially in retirement.

I think it depends on how you will use the property, will you rent it out, will you employ locals to sevice it for you, advertising costs etc, etc.